The Impact Measurement Conundrum
It is 35 days, 15 hours and 57 minutes into my fellowship in Canada. In this time I have met many knowledgeable, enthusiastic and open minded people. In most of these conversations about philanthropy, social innovation, education and impact investing, one topic came up frequently: (impact) measurement. There seems to be in Canada a discussion – to describe it as continuum of opinions – from individualized measures to a “one size fits all” solution.
In this blog, I would like to share my experience with this topic in philanthropy, the third sector in Germany. Similar to the debate in Canada the topic has been picked up by foundations, charities, government, the consulting and accounting industry and Corporate Citizenship teams in the business world. In the beginning this was a rather academic and mechanistic discussion. Today the discourse has changed and is characterized by pragmatism and – this may be a surprise to some – transparency.
Here are four ways that the third sector in Germany has taken (incremental) steps towards (impact) measurement.
The Social Reporting Standard Initiative is a guideline for a standardized report on the work and the impact of civil society organizations. The idea is to a) create a (qualitative) standard in reporting, b) create a launch pad for more (quantitative) reporting and c) save time and resources when reporting to donors and investors. The initiative is backed by grantmakers, social investors, academia and intermediaries. It is not a standard yet but as a low-threshold tool it is accepted by many players as the baseline for (impact) reporting.
Phineo – a charitable shareholder company founded by the Bertelsmann Foundation and the German Stock Exchange which is supported by a variety of business and civil society organizations – introduced several years ago the Social Impact Navigator as a step by step process to develop theories of change for third sector interventions and report on their impact. In parallel, Phineo introduced an “impact seal” that it awards to not-for profit organizations as part of sector reports. These sector reports explore interventions with impact. They have been published on a wide range of issues from climate change, to dementia support to cultural education. Phineo has accompanied this work with an effective public and media presence. Receiving Phineo’s “impact seal” has become an aspiration for sector organizations. The Social Impact Navigator has moved the needle in the (impact) measurement debate.
Another driver toward measurement in Germany has been a push for more transparency in the sector overall including exploration of new ways of talking and measuring impact. The German chapter of the anti-corruption organization Transparency International initiated several years ago the “Initiative Transparente Zivilgesellschaft” (initiative for transparent civil society). It is a low-threshold commitment based on 10 criteria for transparency of not-for profit organizations. These criteria have been signed by 843 organizations, including some of the largest charitable organizations in the sector.
A fourth example is the “Transparenz Preis” (transparency award) of the accounting and consulting firm PwC. The German chapter of PwC initiated the prize in 2005 to point towards good practice on transparency in the charitable sector – again impact measurement was part of the debate. It may not be a surprise that organizations using the Social Reporting Standard have been awarded this prize.
In my observation, measurement is really determined by the questions that you want answered. I learned this from the head of evaluation, Edward Pauly, at the New York based Wallace Foundation in a discussion on the appropriate use of evaluations in the sector. In our work at Active and Beyond Philanthropy we learned that it is often the case that for most philanthropic interventions somebody already has determined indicators for success. Ironically, many in Europe look to Canada for such indicators, for example the Composite Learning Index which measures progress in lifelong learning, or the Canadian Index of Wellbeing.
(Impact) Measurement is important to further the development of philanthropy, impact investing and the third sector overall. In my view good measurement is important, if pursued with pragmatism and patience.